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Paragon pulls out of buyout talks

Paragon has revealed it has turned down an offer for the company for 125p per share and that it’s terminated all current and potential talks regarding a buyout.

A statement today on the London Stock Exchange, says: “Although other discussions have been taking place during this period, the board does not believe that these discussions are likely to result in an offer being forthcoming which it would consider to be acceptable.

“The board has therefore terminated all current discussions. This announcement is made without the agreement or approval of the potential offerors. The board has taken financial advice from UBS Investment Bank.”

Paragon was rumoured to be in talks with US private equity firm Blackstone over a possible takeover earlier in the year.

In the absence of an acceptable offer for the company, the board says Paragon’s loan book of consumer and buy-to-let loans is holding up well.

It says the company has continued to trade in line with management’s expectations during the eleven months to August 31 2008, with small positive variances in net interest income and costs balanced by reduced other income and increased impairments.

Arrears in the consumer books remain stable and whilst arrears over three months within the buy-to-let books have risen over the summer months they remain significantly below the industry average.

The increase in impairments has resulted from the higher buy to let arrears and the decline in house prices.

Lending activity remains consistent with the IMS on July 16 2008, with first mortgage lending mainly limited to further advances, and secured personal finance lending marginally higher than for the same period last year. The redemption rate within the buy to let book has reduced during the summer months compared to the average monthly rate for the year to date, in line with management’s expectations.

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